The capital flow has started to change its way over foreign countries based on globalization. After changes in economic dynamics all over the world, states started to work on Foreign Invesment by regulations. For instance, The legal system of Foreign Direct Invesment in Turkey is restricted by Law numbered 4875, dated 17.06.2003 (Please see our related article…). In order to catch the attention of foreign investors, most of the countries have offered much more options which are on foreign investor’s side. In line with this idea, states have started to use investment incentives that called “support measures”. On the other hand, foreign investors have to get the incentive certificate to use these support measures.

To get this certificate, the Ministry of Economy stipulated conditions for foreign investors. The project of the foreign investment has to be tested by the Ministry of Economy in many ways which is explained in related decree. After the project be approved, the Ministry prepares a document that the incentive certificate.

First support measure is VAT which is a general consumption tax in Turkey. Moreover, VAT;

  • covers all goods and services
  • is applied to all stages from producer to consumer
  • is calculated on transaction value with related rate

Being exempted from VAT is required to have an Invesment Incentive Certificate (“IIC”) accordingly Turkish VAT Law. In accordance with the measure, VAT is not paid for imported and/or domestically provided machinery and equipment within the scope of the investment encouragement certificate. Another support measure is customs duty that is not paid for the machinery and equipment provided from abroad within the scope of the investment encouragement certificate.

Furthermore, Turkish Government has provided the Tax Deduction to foreign investments. The notion of tax deduction is a calculation of income or corporate tax with reduced rates until the total value reaches to the amount of contribution to the investment according to envisaged rate of contribution. One of the other support mesure is VAT refund which is beneficial to foreign investors as much as the rest of support measures. VAT collected on the building & construction expenses made within the frame of strategic investments with a fixed investment amount of 500 million TL will be rebated.

                                                                                                                             Hukuk Desteği

                                                                                                                            (Legal Support)

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